<PAGE> 1
PROSPECTUS SUPPLEMENT Filed Pursuant to Rule 424(b)(1)
(TO PROSPECTUS DATED FEBRUARY 2, 1995) Registration File No.: 33-55377
2,000,000 SHARES
[LONE STAR LOGO]
COMMON STOCK
------------------------
We are a cement and ready-mixed concrete company. All of the shares of
common stock offered hereby are being offered by certain of our stockholders.
The U.S. underwriters will offer 1,600,000 shares in the United States and
Canada and the international managers will offer 400,000 shares outside the
United States and Canada. We will not receive any of the proceeds from the sale
of the common stock by our stockholders. Concurrently with the closing of the
offering, we will purchase from one of the selling stockholders 135,000 of our
warrants to purchase an equivalent number of shares of common stock at a price
per warrant of $69.00 less the exercise price of $18.75 and an amount equal to
the underwriting discount of $3.28 per warrant.
Our common stock is listed on the New York Stock Exchange under the symbol
"LCE." The last reported sale price for the common stock on December 8, 1998 was
$71 1/4 per share.
INVESTING IN THE COMMON STOCK INVOLVES RISKS WHICH ARE DESCRIBED IN THE
"RISK FACTORS" SECTION BEGINNING ON PAGE 10 OF THE ACCOMPANYING PROSPECTUS.
------------------------
<TABLE>
<CAPTION>
PER
SHARE TOTAL
----- -----
<S> <C> <C>
Public Offering Price.................................. $69.00 $138,000,000
Underwriting Discount.................................. $ 3.28 $ 6,560,000
Proceeds, before expenses, to the selling
stockholders.......................................... $65.72 $131,440,000
</TABLE>
The U.S. underwriters may also purchase from one of the selling
stockholders up to an additional 240,000 shares at the public offering price,
less the underwriting discount, within 30 days from the date of this prospectus
supplement to cover over-allotments. The international managers may similarly
purchase up to an aggregate of 60,000 additional shares.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
We expect that the shares of common stock will be ready for delivery in New
York, New York on or about December 14, 1998.
------------------------
MERRILL LYNCH & CO.
CREDIT SUISSE FIRST BOSTON
WARBURG DILLON READ LLC
SCOTT & STRINGFELLOW, INC.
------------------------
The date of this prospectus supplement is December 8, 1998.
<PAGE> 2
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Forward-Looking Statements.................................. S-3
Where You Can Find More Information......................... S-4
Incorporation of Information We File with the SEC........... S-4
Recent Developments......................................... S-5
The Company................................................. S-6
Price Range of Common Stock and Dividends................... S-9
Capitalization.............................................. S-10
Selected Consolidated Financial Data........................ S-11
Selling Stockholders........................................ S-12
Underwriting................................................ S-13
Legal Matters............................................... S-15
Experts..................................................... S-15
</TABLE>
S-2
<PAGE> 3
FORWARD-LOOKING STATEMENTS
This prospectus supplement and the accompanying prospectus (collectively,
the "Prospectus"), and the documents incorporated herein by reference, include
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"). We intend such forward-looking statements to be
covered by the safe harbor provisions for forward-looking statements contained
in the Private Securities Litigation Reform Act of 1995, and we are including
this statement for purposes of complying with these safe harbor provisions. We
have based these forward-looking statements on our current expectations and
projections about future events. These forward-looking statements are not
guarantees of future performance and are subject to risks, uncertainties and
assumptions, including, among other things:
- changes in general economic conditions (such as interest rate changes);
- changes in economic conditions specific to any one or more of our markets
(such as the strength of local real estate markets and the availability
of public funds for construction);
- adverse weather;
- unexpected operational difficulties;
- difficulties related to building and starting operation of plant
improvements and similar capital expenditure projects;
- changes in governmental and public policy including increased
environmental regulation;
- the outcome of pending and future litigation;
- the successful negotiation of labor contracts;
- unforeseen operational difficulties and financial losses due to year 2000
computer problems; and
- the continued availability of financing in the amounts, at the times and
on the terms required to support our future business.
Words such as "expect", "anticipate", "intend", "plan", "believe",
"estimate" and variations of such words and similar expressions are intended to
identify such forward-looking statements. We undertake no obligation to publicly
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise. In light of these risks, uncertainties
and assumptions, the forward-looking events discussed or incorporated by
reference in the Prospectus may not occur.
------------------------
You should rely only on the information contained in the Prospectus and the
documents incorporated herein by reference. We have not, and the underwriters
have not, authorized any other person to provide you different information. If
anyone provides you different or inconsistent information, you should not rely
on it. We are not, and the underwriters are not, making an offer to sell these
securities in any jurisdiction where the offer or sale is not permitted.
S-3
<PAGE> 4
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the Securities
and Exchange Commission ("SEC"). Our SEC filings are also available over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and copy
any document we file at the SEC's public reference rooms in Washington, D.C.,
New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330
for more information on the public reference rooms and their copy charges. You
may also inspect our SEC reports and other information at the New York Stock
Exchange, 20 Broad Street, New York, New York 10005.
INCORPORATION OF INFORMATION WE FILE WITH THE SEC
The SEC allows us to "incorporate by reference" the information we file
with them, which means:
- incorporated documents are considered part of the Prospectus;
- we can disclose important information to you by referring you to those
documents; and
- information that we file with the SEC will automatically update and
supersede the Prospectus.
We are incorporating by reference the documents listed below which were
filed with the SEC under the Exchange Act:
- Annual Report on Form 10-K for the year ended December 31, 1997, as
amended by Form 10K-A, including the portions of our proxy statement,
dated March 30, 1998, incorporated by reference in such reports;
- Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998,
June 30, 1998 and September 30, 1998;
- Registration Statement on Form 8-A, dated March 17, 1994, as amended
by Forms 8-A, dated April 6, 1994 and April 28, 1994; and
- Registration Statement on Form 8-A, dated November 17, 1994.
We also incorporate by reference each of the following documents that we
will file with the SEC after the date of the Prospectus but before the end of
the offering:
- Reports filed under Sections 13(a) and (c) of the Exchange Act;
- Definitive proxy or information statements filed under Section 14 of
the Exchange Act in connection with any subsequent stockholders'
meeting; and
- Any reports filed under Section 15(d) of the Exchange Act.
You may request a copy of any filings referred to above (excluding
exhibits), at no cost, by contacting us at the following address:
Lone Star Industries, Inc.
Attn: James W. Langham, Esq.
Vice President, General Counsel and
Secretary
300 First Stamford Place
P.O. Box 120014
Stamford, CT 06912-0014
Tel: (203) 969-8600
S-4
<PAGE> 5
RECENT DEVELOPMENTS
On November 19, 1998, we declared a two-for-one stock split (the "Stock
Split"), payable on December 28, 1998, to holders of our common stock, par value
$1.00 per share (the "Common Stock"), of record on December 14, 1998. We intend
to maintain our $.05 per share quarterly cash dividend, and as a result double
our total quarterly dividend payment. The record date for our fourth quarter
cash dividend is December 1, 1998. Since this date precedes the date of the
Stock Split, our fourth quarter dividend will be paid only on pre-split Common
Stock. Purchasers of Common Stock in this offering will not receive our fourth
quarter cash dividend. The Common Stock will be quoted "ex-distribution" by the
New York Stock Exchange for the Stock Split on December 29, 1998. Unless
otherwise indicated, the information in the Prospectus does not reflect the
Stock Split.
We recently announced a planned 600,000 short ton rated annual production
capacity increase at our Greencastle, Indiana cement plant which will convert to
a semi-dry manufacturing technology. This project is expected to come on line in
the first half of 2000 and is expected to cost approximately $75.0 million,
$45.0 million of which is expected to be spent in 1999. Also, our 25% joint
venture recently announced an expansion of its Kosmosdale, Kentucky cement plant
by as much as 700,000 short tons of rated annual production capacity at an
estimated total cost of approximately $93.0 million. The joint venture plans to
finance this expansion from its internal cash flow from operations and
additional capital contributions from the partners. This project is expected to
come on line during the year 2000.
S-5
<PAGE> 6
THE COMPANY
BUSINESS
We are a cement and ready-mixed concrete company with operations in the
midwestern and southern United States. We are the seventh largest domestic
producer of cement based on 1997 production capacity, with five wholly-owned
portland cement plants and one wholly-owned slag cement grinding facility. We
also own a 25% interest in Kosmos Cement Company ("Kosmos"), a joint venture
with a major independent domestic cement producer. In 1997, our five portland
cement plants produced approximately 3.9 million short tons of cement, Kosmos
produced 1.3 million short tons of cement and our slag cement grinding facility
produced 190,000 short tons of slag cement. From January 1, 1995 to December 31,
1997, our net sales and net income grew at an average compound annual rate of
5.2% and 35.2%, respectively. For the twelve months ended September 30, 1998, we
had net sales of approximately $339.8 million and net income of approximately
$75.5 million.
Cement Operations. Our operations consist principally of the production of
Type I portland cement, the most commonly used cement in the U.S., at our five
portland cement plants and the distribution of cement through our 15 owned or
leased distribution terminals. Additionally, our integrated distribution system
includes 19 barges and approximately 400 rail cars, which we feel give us a
competitive advantage by, among other things, lowering transportation costs. All
of our five portland cement plants are fully integrated from limestone mining
through final cement production and have estimated limestone reserves ranging
from 30 to 100 years. Our portland cement plants are located in Missouri,
Indiana, Oklahoma, Illinois and Texas. We also have a facility in New Orleans,
Louisiana that produces slag cement, a by-product of iron blast furnaces, which
is utilized as an alternative to portland cement in certain circumstances. Also,
Kosmos owns and operates one portland cement plant in Kentucky and one in
Pennsylvania.
The following table sets forth certain information regarding our portland
and slag cement plants and their markets.
<TABLE>
<CAPTION>
SHORT TONS
OF RATED
ANNUAL
CEMENT
PLANT LOCATION CAPACITY PROCESS PRINCIPAL MARKET AREAS
- -------------- -------------- ------- ----------------------
(IN THOUSANDS)
<S> <C> <C> <C>
PORTLAND CEMENT
Cape Girardeau, Missouri... 1,300 Dry/Precalciner E. Missouri; Central and N.E.
Arkansas; Mississippi; S.
Louisiana; N. Alabama; Tennessee;
N.W. Kentucky; S.W. Illinois
Greencastle, Indiana....... 750* Wet* Indianapolis and other areas of
Indiana; S.E. Illinois; N. Central
Kentucky
Pryor, Oklahoma............ 725 Dry W. Arkansas; Oklahoma; Dallas,
Texas; Kansas; W. Missouri
Oglesby, Illinois.......... 600 Dry Chicago and other areas of Northern
and Central Illinois; S. Wisconsin
Maryneal, Texas............ 520 Dry/Preheater W. Texas; Dallas, Texas
Kosmos Cement Company:
Kosmosdale, Kentucky..... 875** Dry/Preheater Kentucky; S. Indiana; S. Ohio; W.
Virginia
Pittsburgh,
Pennsylvania............. 400 Wet W. Pennsylvania; W. Virginia; E.
Ohio
SLAG CEMENT
New Orleans, Louisiana..... 600 Grinding S. Alabama; S.W. Georgia; Kansas
Facility City, Kansas; S.W. Louisiana;
Mississippi; Dallas and Houston
Texas; Florida Panhandle
</TABLE>
- ---------------
* Capital projects have been announced to increase the rated production
capacity of this plant by 600,000 short tons to 1.350 million short tons.
Upon completion of this project, the plant will convert to a semi-dry
manufacturing technology.
** Capital projects have been announced to increase the rated production
capacity of this plant by 700,000 short tons to 1.575 million short tons.
S-6
<PAGE> 7
Ready-Mixed Concrete Operations. Our ready-mixed concrete operations are
located in the Memphis, Tennessee area. Much of the cement used in these
operations comes from our Cape Girardeau, Missouri plant and is transported via
the Mississippi River. This vertical integration has enabled us to become a
major supplier of ready-mixed concrete to Memphis and the surrounding market. We
do not currently plan to enter the ready-mixed business in other markets.
STRATEGY
In order to meet the continued strong demand for cement in the current
economic environment and grow earnings, we continue to implement the following
business strategy:
Concentrate on Core Cement Business. Our strategic plan is to concentrate
on the manufacture, distribution and sale of cement and cementitious materials
throughout the midwestern and southwestern sections of the country. In addition,
we have been expanding within existing and into new markets in the Southeast
with slag cement and blended products. Cement comprised approximately 93.6% of
our net sales for the nine-month period ended September 30, 1998. We believe
that focusing on our core cement business enhances our competitive position and
productivity.
Selectively Expand and Improve Operations. We seek to increase capacity
and improve operating efficiencies both in the ordinary course of business and
through prudent capital expenditures where we believe we can realize attractive
returns. Our capital expenditures program is designed to increase production
capacity, storage capacity and production efficiencies at existing locations, as
well as to add terminals, rail cars and barges in order to increase and improve
our distribution system. From January 1, 1997 to September 30, 1998, we have
invested an aggregate of $82.0 million in capital projects. Completed and
planned projects include:
- In 1997, and through September 30, 1998, we invested $18.4 million in our
New Orleans facility to, among other things, nearly triple slag cement
capacity to 600,000 short tons, install a state-of-the-art ship and barge
unloading system and build a new distribution terminal near Atlanta,
Georgia.
- In 1998, we completed a $12.5 million capital project at our Cape
Girardeau, Missouri plant, increasing rated annual production capacity by
approximately 100,000 short tons.
- Our 1999 capital spending program includes a 600,000 short ton rated
annual production capacity increase at our Greencastle, Indiana cement
plant which will convert to a semi-dry manufacturing technology. This
project is expected to come on line in the first half of 2000 and is
expected to cost approximately $75.0 million, $45.0 million of which is
expected to be spent in 1999.
- Our joint venture has announced an expansion of its Kosmosdale, Kentucky
cement plant by as much as 700,000 short tons of rated annual production
capacity at an estimated total cost of approximately $93.0 million.
Kosmos plans to fund this expansion from its internal cash flow from
operations and additional capital contributions from the partners. This
project is expected to come on line during the year 2000.
At the end of 2000, the above planned expansions are expected to increase
our total rated annual portland cement production capacity, including our
portion of the joint venture, by 21.3%, or 875,000 short tons, over 1997 levels.
In addition, we continue to evaluate entering new markets either through
acquisitions of existing facilities or new construction.
Continue to Minimize Operating, Corporate and Distribution Costs. We seek
to maximize utilization of our assets while minimizing production, corporate
overhead and transportation costs. In addition, at certain facilities we utilize
alternative fuels to lower fuel expenses, a major cost of production.
Utilize Flexible Distribution Systems. Our cement plants use established
distribution channels to enhance our competitive position. We maintain a network
of strategically located distribution terminals, many of which have access to
relatively inexpensive water transportation. Additionally, we use rail cars and
trucks as
S-7
<PAGE> 8
demand dictates. Therefore, we can deliver our product to meet the changing
demands of the markets we serve.
Enhance Capital Structure and Increase Earnings Per Share. We are
committed to maintaining a strong balance sheet and to increasing earnings per
share for our stockholders. From April 1994 to September 30, 1998, we have:
- generated $360.0 million of cash from operations;
- repurchased 2.9 million shares of our common stock and 44,000 warrants
for a total of $132.0 million;
- repaid $187.0 million of debt;
- funded $178.0 million in new capital projects; and
- sold non-core businesses for total proceeds of $65.0 million.
Additionally, we increased earnings per diluted share by 73% from $2.81 in 1995
to $4.87 in 1997.
INDUSTRY OVERVIEW
Cement is an essential binding material used in making concrete, which is
widely used in residential, commercial and industrial, and public works
construction activities. In 1997, demand for portland cement was comprised of
approximately 25% residential, 30% commercial and industrial and 45% public
works. The cement industry is capital intensive and construction of new
facilities must meet extensive and time consuming federal, state and local
regulatory requirements. The competitive marketing radius of a typical cement
plant for common types of cement is approximately 250 miles as a result of its
low value to weight ratio. However, relatively inexpensive water transportation
can increase these distances considerably. A company's competitive position in a
given market depends largely on the location and operating costs of its plants
and associated distribution terminals, as well as the price in that market. No
single cement company in the U.S. currently has a production and distribution
system extensive enough to serve all domestic markets.
Demand for cement is dependent on levels of construction in a given region
or market. Current demand for cement in our markets is in excess of current
cement production capacity with the shortfall being filled by imports and cement
from other domestic markets. We believe that the cement industry could be
positively affected by a continuation of the current low interest rate
environment, increased government spending on infrastructure, such as the
Transportation Equity Act for the 21st Century (TEA-21) which seeks to increase
federal spending on transportation by approximately 40%, and the continued
enforcement of U.S. anti-dumping laws that restrict dumping of cement in the
U.S. market by foreign producers.
S-8
<PAGE> 9
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
Our Common Stock and warrants are listed on the New York Stock Exchange.
The following table sets forth the high and low sales prices for the Common
Stock and warrants in composite transactions as reported on the New York Stock
Exchange as well as dividend information relating to the Common Stock.
<TABLE>
<CAPTION>
COMMON STOCK(1) WARRANTS(1)
---------------------------- -------------
HIGH LOW DIVIDENDS HIGH LOW
---- --- --------- ---- ---
<S> <C> <C> <C> <C> <C>
1996
First Quarter.............................. $30 1/2 $24 1/4 $0.05 $14 3/8 $ 8 3/4
Second Quarter............................. 37 1/4 29 1/4 0.05 20 13 1/4
Third Quarter.............................. 34 28 3/4 0.05 17 3/8 14
Fourth Quarter............................. 38 1/2 31 7/8 0.05 21 3/8 16
1997
First Quarter.............................. $45 1/4 $34 7/8 $0.05 $28 5/8 $18 1/4
Second Quarter............................. 45 9/16 37 1/4 0.05 28 21
Third Quarter.............................. 54 1/4 45 1/4 0.05 36 1/2 28 1/2
Fourth Quarter............................. 61 1/4 48 7/8 0.05 43 3/8 31 3/4
1998
First Quarter.............................. $69 5/8 $51 1/4 $0.05 $51 1/8 $33 1/2
Second Quarter............................. 84 7/8 66 1/2 0.05 66 48 1/4
Third Quarter.............................. 83 11/16 52 1/2 0.05 64 1/2 34 1/2
Fourth Quarter (through December 8,
1998)................................... 78 7/8 56 0.05(2) 60 38 1/8
</TABLE>
- ---------------
(1) The numbers in the table do not reflect the Stock Split.
(2) Payable on December 15, 1998.
On December 8, 1998, the last reported sale prices of the Common Stock and
the warrants were $71 1/4 per share and $52 3/4 per warrant. As of December 8,
1998, we had approximately 2,077 holders of record of Common Stock and 2,973
holders of record of warrants.
Our financing agreements contain certain restrictive covenants which, among
other things, could have the effect of limiting the payment of dividends and the
repurchase of Common Stock and warrants. At September 30, 1998, approximately
$65.1 million was available for such payments under the most restrictive of such
covenants. The declaration of dividends is within the discretion of our Board of
Directors. We have paid quarterly dividends on our Common Stock for 14
consecutive quarters and we plan to continue to pay $0.05 per share quarterly
cash dividends on our Common Stock. However, any payment of future dividends and
the amounts thereof will depend upon the earnings, financial condition, capital
requirements and other factors deemed relevant by our Board of Directors.
On November 19, 1998, we declared the Stock Split payable on December 28,
1998, to holders of Common Stock of record on December 14, 1998. The Common
Stock will be quoted "ex-distribution" by the New York Stock Exchange for the
Stock Split on December 29, 1998. The record date for our fourth quarter
dividend is December 1, 1998. Since this date precedes the date of the Stock
Split, our fourth quarter dividend will be paid only on pre-split Common Stock.
Since our stock repurchase program began in late 1995, we have purchased an
aggregate of 3.3 million shares of Common Stock and 44,000 warrants.
S-9
<PAGE> 10
CAPITALIZATION
The following table sets forth our consolidated cash and cash equivalents
and capitalization as of September 30, 1998. None of the proceeds of this
offering will be received by us. This table should be read in conjunction with
our interim Consolidated Financial Statements including the related notes
thereto, incorporated by reference herein.
<TABLE>
<CAPTION>
AT
SEPTEMBER 30, 1998
------------------
(IN THOUSANDS)
<S> <C>
Cash and cash equivalents (including cash equivalents of
$112,935,000)............................................. $ 113,107
=========
Long-term debt:
Senior notes.............................................. $ 50,000
---------
Shareholders' equity:
Common stock, $1 par value (authorized -- 50,000,000
shares; issued and outstanding -- 12,350,700 shares
)...................................................... 12,351
Warrants to purchase common stock......................... 14,250
Additional paid-in-capital................................ 178,492
Retained earnings......................................... 235,097
Treasury stock, at cost................................... (114,702)
---------
Total shareholders' equity................................ $ 325,488
---------
Total capitalization........................................ $ 375,488
=========
</TABLE>
S-10
<PAGE> 11
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected financial data are derived from our Consolidated
Financial Statements. The data should be read in conjunction with the
Consolidated Financial Statements, related Notes and other financial information
incorporated by reference herein:
<TABLE>
<CAPTION>
FOR THE NINE MONTHS FOR THE YEARS
ENDED SEPTEMBER 30, ENDED DECEMBER 31,
-------------------- --------------------------------
1998 1997 1997 1996 1995
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS) -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales................................ $259,506 $277,229 $357,565 $367,673 $323,008
Net income............................... $ 58,223 $ 48,167 $ 65,413 $ 54,160 $ 35,762
Basic earnings per share................. $ 5.49 $ 4.40 $ 5.98 $ 4.80 $ 2.98
Diluted earnings per share............... $ 4.30 $ 3.61 $ 4.87 $ 4.09 $ 2.81
Cash dividends per share................. $ 0.15 $ 0.15 $ 0.20 $ 0.20 $ 0.15
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
SEPTEMBER 30, --------------------------------
1998 1997 1996 1995
------------- -------- -------- --------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA (END OF PERIOD):
Total assets................................. $586,653 $598,977 $562,151 $477,465
Long-term debt:
Senior notes............................... $ 50,000 $ 50,000 $ 50,000 $ 78,000
Asset proceeds notes....................... -- -- -- $ 4,399
Common shareholders' equity.................. $325,488 $333,634 $264,282 $159,740
Shares outstanding (in thousands)............ 9,950 10,726 10,713 11,477
</TABLE>
<TABLE>
<CAPTION>
FOR THE NINE MONTHS FOR THE YEARS
ENDED SEPTEMBER 30, ENDED DECEMBER 31,
-------------------- --------------------------------
1998 1997 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
SELECTED STATISTICAL AND OPERATING
DATA:
Gross profit as a percent of net
sales(1).......................... 36.1% 31.2% 32.2% 29.1% 25.4%
SG&A as a percent of net sales...... 7.3% 7.9% 8.1% 7.8% 9.2%
EBITDA(2)........................... $105,660 $ 94,441 $125,912 $112,436 $ 86,100
Depreciation and depletion.......... $ 16,046 $ 18,326 $ 23,591 $ 24,060 $ 23,628
Capital expenditures................ $ 39,977 $ 30,026 $ 41,977 $ 42,640 $ 36,576
Long-term debt as a percent of total
capitalization (end of
period)(3)........................ 13.3% 13.6% 13.0% 15.9% 34.0%
</TABLE>
- ---------------
(1) Gross profit includes net sales less cost of sales, including depreciation
related to cost of sales.
(2) EBITDA represents earnings before interest, taxes, depreciation and
amortization. We have included EBITDA data (which are not a measure of
financial performance under generally accepted accounting principles)
because such data are used by certain investors. EBITDA is not intended as
an alternative measure of operating results or cash flow from operations (as
determined in accordance with generally accepted accounting principles).
EBITDA is not necessarily comparable to similarly titled measures for other
companies and does not necessarily represent amounts of funds available for
management's discretionary use.
(3) Total capitalization includes long-term debt and shareholders' equity.
S-11
<PAGE> 12
SELLING STOCKHOLDERS
The following table presents certain information regarding the securities
held by Metropolitan Life Insurance Company and Metropolitan Insurance and
Annuity Company (the "Selling Stockholders") as of October 31, 1998. This
information was furnished to us by the Selling Stockholders and has not been
verified.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED SHARES BENEFICIALLY OWNED
PRIOR TO OFFERING(1) AFTER OFFERING(1)(2)
-------------------------- --------------------------
PERCENT OF PERCENT OF
OUTSTANDING SHARES BEING OUTSTANDING
SHARES SHARES OFFERED SHARES SHARES
---------- ------------ ------------ ---------- ------------
<S> <C> <C> <C> <C> <C>
COMMON STOCK
Metropolitan Life Insurance
Company(3)................. 2,365,708(4) 22.6% 1,632,070(5) 598,638(6) 5.9%
Metropolitan Insurance and
Annuity Company............ 367,930 3.8 367,930 -- --
--------- ------------ ---------
Total................. 2,733,638 26.1 2,000,000 598,638 5.9
--------- ------------ ---------
--------- ------------ ---------
</TABLE>
- ---------------
(1) Beneficial ownership has been determined based upon 9,581,407 shares of
Common Stock outstanding on October 31, 1998. In addition, in accordance
with the rules of the SEC shares of Common Stock subject to options or
warrants exercisable within 60 days of October 31, 1998 are deemed
outstanding for computing the percentage beneficially owned by the person or
group holding such options or warrants, but are not deemed outstanding for
computing the percentage of any other person. Except as noted, each
stockholder has sole voting power and sole investment power with respect to
all shares beneficially owned by such stockholder.
(2) Assumes there is no exercise of the over-allotment option which Metropolitan
Life Insurance Company has granted the U.S. underwriters with respect to
240,000 shares of Common Stock and to the international managers with
respect to 60,000 shares of Common Stock.
(3) Robert G. Schwartz is one of our directors and is also a director of
Metropolitan Life Insurance Company.
(4) Includes (i) 891,609 shares of Common Stock issuable upon the exercise of
warrants, (ii) 800 shares of Common Stock acquired for the benefit of
Metropolitan Life Insurance Company by an affiliated investment advisor who
is registered under Section 203 of the Investment Advisers Act and follows
an independent investment decision-making process and has sole voting and/or
dispositive power over such securities and (iii) 200 shares of Common Stock
owned by another subsidiary insurance company. Does not include an aggregate
of 36,000 shares of Common Stock which are managed by such affiliated
investment advisor for the benefit of third parties.
(5) Includes 163,871 shares of Common Stock to be offered upon the exercise of
warrants by Metropolitan Life Insurance Company.
(6) Gives effect to our purchase from one of the Selling Stockholders of 135,000
of our warrants to purchase an equivalent number of shares of Common Stock
and includes (i) 592,738 shares of Common Stock issuable upon the exercise
of warrants, (ii) 800 shares of Common Stock acquired for the benefit of
Metropolitan Life Insurance Company by an affiliated investment advisor who
is registered under Section 203 of the Investment Advisers Act and follows
an independent investment decision making process and has sole voting and/or
dispositive power over such securities and (iii) 200 shares of Common Stock
owned by another subsidiary insurance company. Does not include an aggregate
of 36,000 shares of Common Stock which are managed by such affiliated
investment advisor for the benefit of third parties.
We and the Selling Stockholders are parties to a registration rights
agreement pursuant to which this offering is being made. Pursuant to this
agreement, we are required to pay expenses incident to the registration,
offering and sale of the securities, other than underwriting commissions, and to
indemnify the Selling Stockholders against certain civil liabilities, including
liabilities under the Securities Act of 1933, as amended. The Selling
Stockholders have also executed lock-up agreements. See "Underwriting."
Pursuant to an agreement between us and the Selling Stockholders,
concurrently with the closing of this offering, we will purchase from one of the
Selling Stockholders warrants to purchase 135,000 shares of Common Stock at a
price per warrant of $69.00 less the exercise price of $18.75 and an amount
equal to the underwriting discount per warrant.
Metropolitan Life Insurance Company, along with one of its subsidiaries,
provides various services in connection with the sponsorship and administration
of our salaried and hourly employee 401(k) savings plans. In addition,
Metropolitan Life Insurance Company and one of its affiliates hold our $50.0
million principal amount of 7.31% senior notes due 2007.
S-12
<PAGE> 13
UNDERWRITING
Subject to the terms and conditions contained in the purchase agreement
among us, the Selling Stockholders and Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Credit Suisse First Boston Corporation, Warburg Dillon Read LLC
and Scott & Stringfellow, Inc. (collectively, the "U.S. Underwriters"), and
concurrently with the sale of 400,000 shares of Common Stock to the
International Managers (as defined below), the Selling Stockholders have agreed
to sell to each of the U.S. Underwriters and each of the U.S. Underwriters has
agreed to purchase from the Selling Stockholders the shares of Common Stock set
forth opposite its name below.
<TABLE>
<CAPTION>
NUMBER
U.S. UNDERWRITERS OF SHARES
----------------- ---------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................... 480,000
Credit Suisse First Boston Corporation...................... 480,000
Warburg Dillon Read LLC..................................... 480,000
Scott & Stringfellow, Inc................................... 160,000
---------
Total.......................................... 1,600,000
=========
</TABLE>
We and the Selling Stockholders have also entered into an international
purchase agreement with certain managers outside the United States and Canada
for whom Merrill Lynch International, Credit Suisse First Boston (Europe)
Limited, UBS AG, acting through its division Warburg Dillon Read, and Scott &
Stringfellow, Inc. are acting as managers (the "International Managers").
Subject to the terms and conditions set forth in the international purchase
agreement, and concurrently with the sale of 1,600,000 shares of Common Stock to
the U.S. Underwriters pursuant to the U.S. purchase agreement, the Selling
Stockholders have agreed to sell to the International Managers and the
International Managers severally have agreed to purchase from the selling
stockholders, an aggregate of 400,000 shares of Common Stock. The public
offering price per share and the total underwriting discount per share are
identical under the U.S. purchase agreement and the international purchase
agreement.
In the U.S. purchase agreement and the international purchase agreement,
the several U.S. Underwriters and the several International Managers,
respectively, have agreed, subject to the terms and conditions set forth
therein, to purchase all of the shares of Common Stock being sold pursuant to
each such agreement if any of the shares of Common Stock being sold pursuant to
such agreement are purchased. Under certain circumstances, the commitments of
non-defaulting U.S. Underwriters or International Managers (as the case may be)
may be increased. The closings with respect to the sale of Common Stock to be
purchased by the International Managers and the U.S. Underwriters are
conditioned upon one another.
The U.S. Underwriters have advised the Selling Stockholders that they
propose initially to offer the Common Stock to the public at the public offering
price set forth on the cover page of this prospectus supplement, and to certain
dealers at such price less a concession not in excess of $2.00 per share. The
U.S. Underwriters may allow, and such dealers may reallow, a discount not in
excess of $.10 per share to certain other dealers. After the offering, the
public offering price, concession and discount may be changed.
Our Common Stock is traded on the New York Stock Exchange.
One of the Selling Stockholder has granted an option to the U.S.
Underwriters, exercisable during the 30-day period after the date of this
prospectus supplement, to purchase up to an aggregate of 240,000 additional
shares of Common Stock at the public offering price set forth on the cover page
of this prospectus supplement, less the underwriting discount. The U.S.
Underwriters may exercise this option only to cover over-allotments, if any.
Such Selling Stockholder has also granted an option to the International
Managers, exercisable during the 30-day period after the date of this prospectus
supplement, to purchase up to an aggregate of 60,000 shares of Common Stock to
cover over-allotments, if any, on terms similar to those granted to the U.S.
Underwriters.
S-13
<PAGE> 14
The following table shows the per share and total public offering price,
underwriting discount to be paid by the Selling Stockholders to the U.S.
Underwriters and the International Managers, and the proceeds before expenses to
the Selling Stockholders. The amounts are shown assuming either no exercise or
full exercise by the U.S. Underwriters and the International Managers of their
over-allotment options.
<TABLE>
<CAPTION>
WITHOUT WITH
PER SHARE OPTION OPTION
--------- ------------ ------------
<S> <C> <C> <C>
Public Offering Price........................... $69.00 $138,000,000 $158,700,000
Underwriting Discount........................... $ 3.28 $ 6,560,000 $ 7,544,000
Proceeds, before expenses, to the Selling
Stockholders.................................. $65.72 $131,440,000 $151,156,000
</TABLE>
We expect to incur expenses of approximately $300,000 in connection with
this offering. These expenses are estimated to include printing costs of
$125,000, legal fees of $75,000, accounting fees of $75,000, and miscellaneous
expenses of $25,000.
The shares of Common Stock are being offered by the several U.S.
Underwriters and the International Managers, subject to prior sale, when as and
if issued to and accepted by them, subject to approval of certain legal matters
by their counsel. The U.S. Underwriters and International Managers reserve the
right to withdraw, cancel or modify such offer and reject orders in whole or in
part.
Until the distribution of the shares of Common Stock is completed, certain
rules of the Securities and Exchange Commission may limit the ability of the
U.S. Underwriters to bid for and purchase shares of Common Stock. As an
exception to these rules, the U.S. Underwriters are permitted to engage in
certain transactions that stabilize the price of the Common Stock. Such
transactions consist of bids or purchases for the purpose of pegging, fixing or
maintaining the price of the Common Stock.
If the U.S. Underwriters create a short position in the Common Stock in
connection with this offering (i.e., if they sell more shares of Common Stock
than are set forth on the cover page of this prospectus supplement), the U.S.
Underwriters may reduce that short position by purchasing shares in the open
market. The U.S. Underwriters may also elect to reduce any short position
through the exercise of all or part of the over-allotment option described
above.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases.
Neither we, the Selling Stockholders nor the U.S. Underwriters make any
representation or prediction as to the direction or magnitude of any effect that
the transactions described above might have on the price of the shares. In
addition, neither we, the Selling Stockholders nor the U.S. Underwriters make
any representation that the U.S. Underwriters will engage in such transactions
or that such transactions, once commenced, will not be discontinued without
notice.
The U.S. Underwriters and the International Managers have entered into an
intersyndicate agreement that provides for the coordination of their activities.
Pursuant to the intersyndicate agreement, the U.S. Underwriters and the
International Managers are permitted to sell shares of Common Stock to each
other for purposes of resale at the public offering price, less an amount not
greater than the selling concession. Under the terms of the intersyndicate
agreement, the International Managers and any dealer to whom they sell shares of
Common Stock will not offer to sell or sell shares of Common Stock to persons
who are U.S. or Canadian persons or to persons they believe intend to resell to
persons who are U.S. or Canadian persons and the U.S. Underwriters, and any
dealer to whom they sell shares of Common Stock will not offer to sell or sell
shares of Common Stock to non-U.S. persons or to non-Canadian persons or to
persons they believe intend to resell to non-United States or non-Canadian
persons, except in the case of transactions pursuant to the intersyndicate
agreement.
We and the Selling Stockholders have agreed to indemnify the U.S.
Underwriters and the International Managers against certain liabilities,
including liabilities under the Securities Act of 1933, as amended, or if
indemnification is not allowed, to contribute to payments the U.S. Underwriters
or the International Managers may be required to make because of those
liabilities.
S-14
<PAGE> 15
We, certain of our officers and directors and the Selling Stockholders
(with respect to those shares of Common Stock included under "Selling
Stockholders" or acquired hereafter for their general accounts) have agreed for
a period of 90 days from the date of this prospectus supplement not to, without
the prior written consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated,
offer, sell or otherwise dispose of any shares of Common Stock or any other
security convertible into or exercisable (including, without limitation,
warrants) for shares of Common Stock (except pursuant to our stock option or
dividend reinvestment plans and certain other agreements), provided, however,
that the Selling Stockholders have reserved the right to sell during such 90 day
period, up to 6,000 shares of the Common Stock owned by the Selling Stockholders
immediately after the date of this offering. See "Selling Stockholders."
The U.S. Underwriters and/or their affiliates, from time to time, have performed
and may in the future be engaged to perform investment banking and financial
advisory services for us. In connection with rendering such services in the
past, the U.S. Underwriters and their affiliates have received customary
compensation, including reimbursement of related expenses.
LEGAL MATTERS
We have been separately advised by Proskauer Rose LLP, New York, New York,
as to matters between us and the Selling Stockholders relating to this offering.
Certain legal matters in connection with this offering will be passed upon for
the U.S. Underwriters and the International Managers by Cahill Gordon & Reindel
(a partnership including a professional corporation), New York, New York. Rogers
& Wells LLP has acted as counsel to the Selling Stockholders in connection with
this offering and also acts and may hereafter act as counsel to the Selling
Stockholders and their respective affiliates.
EXPERTS
Our consolidated financial statements included in our Annual Report on Form
10-K for the year ended December 31, 1997 and incorporated by reference in the
Prospectus have been incorporated herein in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
that firm as experts in accounting and auditing.
S-15
<PAGE> 16
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2,000,000 SHARES
[LONE STAR LOGO]
COMMON STOCK
------------------------------------------------
PROSPECTUS SUPPLEMENT
------------------------------------------------
MERRILL LYNCH & CO.
CREDIT SUISSE FIRST BOSTON
WARBURG DILLON READ LLC
SCOTT & STRINGFELLOW, INC.
DECEMBER 8, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 17
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED FEBRUARY 2, 1995)
2,000,000 SHARES
[LONE STAR LOGO]
COMMON STOCK
------------------------
We are a cement and ready-mixed concrete company. All of the shares of
common stock offered hereby are being offered by certain of our stockholders.
The international managers will offer 400,000 shares outside the United States
and Canada and the U.S. underwriters will offer 1,600,000 shares in the United
States and Canada. We will not receive any of the proceeds from the sale of the
common stock by our stockholders. Concurrently with the closing of the offering,
we will purchase from one of the selling stockholders 135,000 of our warrants to
purchase an equivalent number of shares of common stock at a price per warrant
of $69.00 less the exercise price of $18.75 and an amount equal to the
underwriting discount of $3.28 per warrant.
Our common stock is listed on the New York Stock Exchange under the symbol
"LCE." The last reported sale price for the common stock on December 8, 1998 was
$71 1/4 per share.
INVESTING IN THE COMMON STOCK INVOLVES RISKS WHICH ARE DESCRIBED IN THE
"RISK FACTORS" SECTION BEGINNING ON PAGE 10 OF THE ACCOMPANYING PROSPECTUS.
------------------------
<TABLE>
<CAPTION>
PER SHARE TOTAL
--------- -----
<S> <C> <C>
Public Offering Price.................................. $69.00 $138,000,000
Underwriting Discount.................................. $ 3.28 $ 6,560,000
Proceeds, before expenses, to the selling
stockholders.......................................... $65.72 $131,440,000
</TABLE>
The international managers may also purchase from one of the selling
stockholders up to an additional 60,000 shares at the public offering price,
less the underwriting discount, within 30 days from the date of this prospectus
supplement to cover over-allotments. The U.S. underwriters may similarly
purchase up to an aggregate of 240,000 additional shares.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
We expect that the shares of common stock will be ready for delivery in New
York, New York on or about December 14, 1998.
------------------------
MERRILL LYNCH INTERNATIONAL
CREDIT SUISSE FIRST BOSTON
WARBURG DILLON READ
SCOTT & STRINGFELLOW, INC.
------------------------
The date of this prospectus supplement is December 8, 1998.
<PAGE> 18
UNDERWRITING
Subject to the terms and conditions contained in the purchase agreement
among us, the Selling Stockholders and Merrill Lynch International, Credit
Suisse First Boston (Europe) Limited, UBS AG, acting through its division
Warburg Dillon Read ("Warburg Dillion Read"), and Scott & Stringfellow, Inc.
(collectively, the "International Managers"), and concurrently with the sale of
1,600,000 shares of Common Stock to the U.S. Underwriters (as defined below),
the Selling Stockholders have agreed to sell to each of the International
Managers and each of the International Managers has agreed to purchase from the
Selling Stockholders the shares of Common Stock set forth opposite its name
below.
<TABLE>
<CAPTION>
NUMBER
INTERNATIONAL MANAGERS OF SHARES
- ------------------------------------------------------------ ---------
<S> <C>
Merrill Lynch International................................. 120,000
Credit Suisse First Boston (Europe) Limited................. 120,000
Warburg Dillon Read......................................... 120,000
Scott & Stringfellow, Inc................................... 40,000
-------
Total.......................................... 400,000
=======
</TABLE>
We and the Selling Stockholders have also entered into a U.S. purchase
agreement with certain underwriters in the United States and Canada for whom
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Credit Suisse First Boston
Corporation, Warburg Dillon Read LLC and Scott & Stringfellow, Inc., are acting
as underwriters (the "U.S. Underwriters"). Subject to the terms and conditions
set forth in the U.S. purchase agreement, and concurrently with the sale of
400,000 shares of Common Stock to the International Managers pursuant to the
international purchase agreement, the Selling Stockholders have agreed to sell
to the U.S. Underwriters and the U.S. Underwriters severally have agreed to
purchase from the Selling Stockholders an aggregate of 1,600,000 shares of
Common Stock. The public offering price per share and the total underwriting
discount per share are identical under the international purchase agreement and
the U.S. purchase agreement.
In the international purchase agreement and the U.S. purchase agreement,
the several International Managers and the several U.S. Underwriters,
respectively, have agreed, subject to the terms and conditions set forth
therein, to purchase all of the shares of Common Stock being sold pursuant to
each such agreement if any of the shares of Common Stock being sold pursuant to
such agreement are purchased. Under certain circumstances, the commitments of
non-defaulting International Managers or U.S. Underwriters (as the case may be)
may be increased. The closings with respect to the sale of Common Stock to be
purchased by the International Managers and the U.S. Underwriters are
conditioned upon one another.
The International Managers have advised the Selling Stockholders that they
propose initially to offer the Common Stock to the public at the public offering
price set forth on the cover page of this prospectus supplement, and to certain
dealers at such price less a concession not in excess of $2.00 per share. The
International Managers may allow, and such dealers may reallow, a discount not
in excess of $.10 per share to certain other dealers. After the offering, the
public offering price, concession and discount may be changed.
Our Common Stock is traded on the New York Stock Exchange.
The Selling Stockholders have granted an option to the International
Managers, exercisable during the 30-day period after the date of this prospectus
supplement, to purchase up to an aggregate of 60,000 additional shares of Common
Stock at the public offering price set forth on the cover page of this
prospectus supplement, less the underwriting discount. The International
Managers may exercise this option only to cover over-allotments, if any. The
Selling Stockholders have also granted an option to the U.S. Underwriters,
exercisable during the 30-day period after the date of this prospectus
supplement, to purchase up to an aggregate of 240,000 shares of Common Stock to
cover over-allotments, if any, on terms similar to those granted to the
International Managers.
S-13
<PAGE> 19
The following table shows the per share and total public offering price,
underwriting discount to be paid by the Selling Stockholders to the
International Managers and the U.S. Underwriters, and the proceeds before
expenses to the Selling Stockholders. The amounts are shown assuming either no
exercise or full exercise by the International Managers and the U.S.
Underwriters of their over-allotment option.
<TABLE>
<CAPTION>
WITHOUT WITH
PER SHARE OPTION OPTION
--------- ------------ ------------
<S> <C> <C> <C>
Public Offering Price............................... $69.00 $138,000,000 $158,700,000
Underwriting Discount............................... $ 3.28 $ 6,560,000 $ 7,544,000
Proceeds, before expenses, to the Selling
Stockholders...................................... $65.72 $131,440,000 $151,156,000
</TABLE>
We expect to incur expenses of approximately $300,000 in connection with
this offering. These expenses are estimated to include printing costs of
$125,000, legal fees of $75,000, accounting fees of $75,000, and miscellaneous
expenses of $25,000.
The shares of Common Stock are being offered by the several International
Managers and U.S. Underwriters, subject to prior sale, when as and if issued to
and accepted by them, subject to approval of certain legal matters by their
counsel. The International Managers and the U.S. Underwriters reserve the right
to withdraw, cancel or modify such offer and reject orders in whole or in part.
Until the distribution of the shares of Common Stock is completed, certain
rules of the Securities and Exchange Commission may limit the ability of the
International Managers to bid for and purchase shares of Common Stock. As an
exception to these rules, the International Managers are permitted to engage in
certain transactions that stabilize the price of the Common Stock. Such
transactions consist of bids or purchases for the purpose of pegging, fixing or
maintaining the price of the Common Stock.
If the International Managers create a short position in the Common Stock
in connection with this offering (i.e., if they sell more shares of Common Stock
than are set forth on the cover page of this prospectus supplement), the
International Managers may reduce that short position by purchasing shares in
the open market. The International Managers may also elect to reduce any short
position through the exercise of all or part of the over-allotment option
described above.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases.
Neither we, the Selling Stockholders nor the International Managers make
any representation or prediction as to the direction or magnitude of any effect
that the transactions described above might have on the price of the shares. In
addition, neither we, the Selling Stockholders nor the International Managers
make any representation that the International Managers will engage in such
transactions or that such transactions, once commenced, will not be discontinued
without notice.
The International Managers and the U.S. Underwriters have entered into an
intersyndicate agreement that provides for the coordination of their activities.
Pursuant to the intersyndicate agreement, the International Managers and the
U.S. Underwriters are permitted to sell shares of Common Stock to each other for
purposes of resale at the public offering price, less an amount not greater than
the selling concession. Under the terms of the intersyndicate agreement, the
U.S. Underwriters and any dealer to whom they sell shares of Common Stock will
not offer to sell or sell shares of Common Stock to persons who are non-U.S. or
non-Canadian persons or to persons they believe intend to resell to persons who
are non-U.S. or non-Canadian persons and the International Managers, and any
dealer to whom they sell shares of Common Stock will not offer to sell or sell
shares of Common Stock to U.S. persons or to Canadian persons or to persons they
believe intend to resell to United States or Canadian persons, except in the
case of transactions pursuant to the intersyndicate agreement.
Each International Manager has agreed that (i) it has not offered or sold
and will not for a period of six months after the date of this offering, offer
or sell in the United Kingdom by means of any document, any of the shares of
Common Stock offered by this prospectus supplement, other than to persons whose
ordinary
S-14
<PAGE> 20
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their businesses or
otherwise in circumstances that do not constitute an offer to the public under
the Public Offers of Securities Regulations 1995, (ii) it has complied with and
will comply with all applicable provisions of the Financial Services Act 1986
with respect to anything done by it in relation to the shares of Common Stock in
the United Kingdom and (iii) it has only issued or passed on and will only issue
or pass on to any person in the United Kingdom any document received by it in
connection with the issue of the shares of Common Stock if that person is of a
kind described in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1995, as amended, or is a person to whom a
document may otherwise be lawfully delivered or passed on.
We and the Selling Stockholders have agreed to indemnify the International
Managers and the U.S. Underwriters against certain liabilities, including
liabilities under the Securities Act of 1933, as amended, or if indemnification
is not allowed, to contribute to payments the International Managers or the U.S.
Underwriters may be required to make because of those liabilities.
We, certain of our officers and directors and the Selling Stockholders
(with respect to those shares of Common Stock included under "Selling
Stockholders" or acquired hereafter for their general accounts) have agreed for
a period of 90 days from the date of this prospectus supplement not to, without
the prior written consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated,
offer, sell or otherwise dispose of any shares of Common Stock or any other
security convertible into or exercisable (including, without limitation,
warrants) for shares of Common Stock (except pursuant to our stock option or
dividend reinvestment plans and certain other agreements), provided, however,
that the Selling Stockholders have reserved the right to sell during such 90 day
period, up to 6,000 shares of the Common Stock owned by the Selling Stockholders
immediately after the date of this offering. See "Selling Stockholders."
The International Managers and/or their affiliates, have from time to time
and may in the future be engaged to perform investment banking and financial
advisory services for us. In connection with rendering such services in the
past, the International Managers and their affiliates have received customary
compensation, including reimbursement of related expenses.
LEGAL MATTERS
We have been separately advised by Proskauer Rose LLP, New York, New York,
as to matters between us and the Selling Stockholders relating to this offering.
Certain legal matters in connection with this offering will be passed upon for
the U.S. Underwriters and the International Managers by Cahill Gordon & Reindel
(a partnership including a professional corporation), New York, New York. Rogers
& Wells LLP has acted as counsel to the Selling Stockholders in connection with
this offering and also acts and may hereafter act as counsel to the Selling
Stockholders and their respective affiliates.
EXPERTS
Our consolidated financial statements included in our Annual Report on Form
10-K for the year ended December 31, 1997 and incorporated by reference in the
Prospectus have been incorporated herein in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
that firm as experts in accounting and auditing.
S-15
<PAGE> 21
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2,000,000 SHARES
[LONE STAR LOGO]
COMMON STOCK
------------------------------------------------
PROSPECTUS SUPPLEMENT
------------------------------------------------
MERRILL LYNCH INTERNATIONAL
CREDIT SUISSE FIRST BOSTON
WARBURG DILLON READ
SCOTT & STRINGFELLOW, INC.
DECEMBER 8, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
